http://www.zerohedge.com/contributed/2012-12-23/%E2%80%9Ctrench-warfare%E2%80%9D-and-%E2%80%9Ccivil-war%E2%80%9D-over-%E2%80%9Cconfiscatory-taxes%E2%80%9D-france
Submitted by testosteronepit on 12/23/2012 18:34 -0500
“Trench Warfare” And “Civil War” Over “Confiscatory Taxes” In France
Wolf Richter www.testosteronepit.com www.amazon.com/author/wolfrichter
“We’re engaging in trench warfare,”proclaimed Alain Afflelou, head honcho and founder of an eyewear company with 1,200 stores in France and other countries. One of the wealthiest men in France. He was talking about the tax fiasco that split France in two. He was done with his country. He’s moving to London. One of France’s so-called fiscal exiles.
He’d set up his international headquarters in Switzerland, rather than France, 15 years ago to minimize his company’s tax burden, but now he’d personally bail out.
The clamor had started in September when it leaked out that Bernard Arnault, richest man in France and CEO of luxury-goods empires LVMH and Groupe Arnault, was applying for Belgian citizenship. In response, Economy Minister Pierre Moscovici threatened to renegotiate the tax treaties with Belgium, Luxembourg, and Switzerland. A few days ago, reports surfaced in the Belgian media that mailbox companies—a dozen at the Brussels apartment of a Groupe Arnault director alone—have allowed Arnault’s empire to escape several hundred million euros in taxes.
Belgium got cold feet. On Saturday before Christmas when nothing was supposed to happen, Anti-Fraud Secretary of State John Crombez requested that Finance Minister Steven Vanackere transfer Arnault’s tax file to the tax authorities in France, an idea the minister did not immediately reject.
Now Arnault got cold feet. LVMH and Groupe Arnault defended themselves the best they could, claiming that these mailbox companies had “economically perfectly real activities in Belgium where some of them have been implanted for decades.” Indeed, they were “surprised” by the allegations.
But no one stirred up the heat in France like iconic actor Gérard Depardieu who, turns out, set up his domicile in Néchin, a village just across the border in Belgium—as the mayor confirmed, “to escape French taxation.”
Final straw for President Hollande. Now he too threatened to renegotiate the tax treaty “to deal with cases of those who settle in some Belgian village.” He lashed out against the “fiscal dumping” that some countries in the EU were practicing. Prime Minister Jean-Marc Ayrault chimed in; Depardieu’s exile was “pretty pathetic.”
Depardieu was not amused. In an open letter, he renounced his French citizenship, broadsided the Prime Minister and the President, and shocked the nation: all taxes combined ate up 85% of his income.
Not true, explained eyewear mega-retailer Alain Afflelou during the interview. “Those who are in the 75% income-tax bracket may go well beyond 90% taxation.” He listed layers of additional taxes, small percentages here and there that added up. “We therefore have in France a confiscatory taxation that can deprive us of all of our income from work.”
Then he uttered “trench warfare” to describe the battle between the two sides. “We have to stop saying that CEOs are thieves, thugs, and dishonest people. We need people who work, who make a living, who create jobs.”
He was echoing Laurence Parisot, President of the MEDEF, France’s largest employer union. “Doubt is taking over the life force of the country,” she complained; Hollande in his confrontation with Depardieu was doing “the opposite of what he promised,” namely to pacify the country and reduce antagonism. “We are in the process of creating a climate of civil war, similar to 1789,” she said.
Hollande jumped on the airwaves and tried to impose some sort of armistice. The 75% tax bracket would be temporary, he said. And concerning Depardieu: “No citizen must be stigmatized by the President.” But by using that word, he stigmatized him—and all the others who’re trying to escape.
There are a lot of them. Le Figaro cited tax lawyers who spoke of “unprecedented waves” of fiscal exiles who were leaving France, some of them in the middle of the school year, which “had never happened before.” Moving companies confirmed it. Outflows “remain two to three times higher than normal,” said the boss of one of them. “Our trucks leave constantly in direction of Switzerland, Belgium, and Great Britain.”
And the profile of the fiscal exiles has changed. They’re no longer rich heirs or fifty-year-olds who’d sold their companies, but “young childless entrepreneurs” who wanted “to settle in another country to start up their companies,” according to one of the tax lawyers. And top executives between 40 and 55 were moving with their kids to Brussels or London “to escape” the new taxes.
Entire skill sets were leaving. International companies were “progressively relocating part of their teams abroad,” said le Figaro’s source within the MEDEF. Among them more and more secondary functions, such as human resources or finance—”much less visible and symbolic than relocating headquarters.”
With heavy consequences for the economy. When talent, entrepreneurial energy, capital, and profits leave the country all at the same time, it’s hard to imagine how economic growth and job creation could miraculously reappear.
and......
http://www.testosteronepit.com/home/2012/12/21/the-eu-bailout-oligarchy-issues-a-report-about-itself.html
The EU Bailout Oligarchy Issues A Report About Itself
FRIDAY, DECEMBER 21, 2012 AT 4:59PM
On Friday before Christmas when nobody was paying attention, when people were elbowing their way through department stores or heading out for vacation, the European Commission issued its report on bank bailouts in the European Union—a dry document with mind-boggling numbers that left out the most important fact.
The misnamed “2012 State Aid Scoreboard“ provided a sobering number—misnamed because it covered the period from October 2008 through December 2011, and not 2012. It had taken the Commission bureaucracy a year to add up all the numbers, and there were a lot of them to add up. Turns out, the amount that the governments of all 27 EU states had handed to their banks to prop them up or bail them out amounted to €1.616 trillion ($2.1 trillion).
It does not include the bank bailouts of 2012, such as Spain, whose banks are getting their first installment of €39 billion, or Greece [The Price Of “Collective Trauma”: Greece At The Brink of Civil War], or tiny Cyprus whose banks alone require at least €10 billion [The Bailout Of Russian “Black Money” In Cyprus]. Nor does it include any of the ECB’s bailout operations.
Nevertheless, €1.616 trillion is a big number: 13% of European Union GDP. Of that, €1.174 trillion was for “liquidity support,” and €442 billion was for “bank solvency” support, such as recapitalizations and dumping “impaired assets.”
The usual suspects? Um....
In third position, Germany, whose banks received 16% of the total.
In second position, Ireland, whose banks also got 16% of the total. Time and again, we can only shake our heads at the act of insanity committed by the Irish government at the time when it decided to condemn its citizens and taxpayers, current and future, to bail out and make whole the investors in Irish banks—a decision that bankrupted the entire country though it had had its fiscal house in order, until then.
And in first position, drumroll.... the UK, whose rotten banks, now coddled and protected in the City, received 19% of the total.
The Scorecard is short and dry. Nowhere does it say that the citizens and taxpayers of these countries paid not for the bailout of the banks, but for the bailout of their investors, including stockholders, bondholders, counter parties, and other investors and speculators. Guaranteeing deposit or transaction accounts is one thing. But bailing out investors and speculators who’d taken risks and had been compensated for them through yield or the lure of capital gains is quite another.
Socializing the losses and risks that certain privileged investors have incurred—and then allowing them to profit from the bailouts—is of course the purpose of all bailouts. It’s not the bank per se that is important, but its investors. A topic that the bailout oligarchy wraps in silence.
Eurozone banks cause an additional wrinkle: a big bank bailout can take down the entire country, as we have seen, because it cannot print the bailout money itself. So, to keep countries from going bankrupt, the bailout oligarchy shanghaied taxpayers in other countries—even in the US through the IMF. And the bailout of bank investors became transnational.
This is the spirit of further Eurozone and EU integration, advanced by the fiscal union pact, the banking union, and other measures. They’re designed to facilitate these transfers and investor bailouts, to bake them into the system, and make them part of the ordinary procedures buried in a flood of boring press releases. At some point, the people are no longer able to care.
Integration would make it easier to centralize the bailouts on the ECB—and it can print money! Regardless of what the treaties say. But Bundesbank President Jens Weidmann wasn’t enthusiastic. He didn’t “see the big leap into the fiscal union,” he told the Wirtschafts Woche, because it would require the surrender of certain aspects of national sovereignty, for which there was little political will and support from the population.
And he resisted the idea that politically unsolved problems, such as budget deficits, would be shuffled to the ECB. “As guardian of the currency, we must make clear that we’re committed exclusively to our primary goal: monetary stability,” he said. “We’re not the clean-up crew for political failure.”
France’s ability to attract massive amounts of foreign investment has been called a paradox. Because it shouldn’t be able to. Investors should be scared off by labor laws, tax rates, and the threats of nationalizations. Turns out, for multinational corporations, France is a tax haven. But in the era of austerity, it has reached the boiling point. Read.... The French Revolt Against Corporate Welfare Programs For Multinationals.
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